Purchase and sale of hybrid vehicle in same year

Technical topics regarding tax preparation.
#1
CO CPA  
Posts:
729
Joined:
17-Oct-2018 10:46am
Location:
Colorado (CO)
I have a client that bought a hybrid vehicle during 2020 that qualifies for the credit. However, they then sold the vehicle 5 months later (also in 2020). Can you they still receive the credit? I'm not finding anything indicating no...
 

#2
AlexCPA  
Posts:
488
Joined:
11-Apr-2018 9:40pm
Location:
A Shark On A Cash Reef
Per 26 CFR § 1.30-1 - Definition of qualified electric vehicle and recapture of credit for qualified electric vehicle. (emphasis mine):

(2) Recapture event -

(i) In general. A recapture event occurs if, within 3 full years from the date a qualified electric vehicle is placed in service, the vehicle ceases to be a qualified electric vehicle. A vehicle ceases to be a qualified electric vehicle if -

(A) The vehicle is modified so that it is no longer primarily powered by electricity;

(B) The vehicle is used in a manner described in section 50(b); or

(C) The taxpayer receiving the credit under section 30 sells or disposes of the vehicle and knows or has reason to know that the vehicle will be used in a manner described in paragraph (b)(2)(i)(A) or (B) of this section.

(ii) Exception for disposition. Except as provided in paragraph (b)(2)(i)(C) of this section, a sale or other disposition (including a disposition by reason of an accident or other casualty) of a qualified electric vehicle is not a recapture event.


Per IRS Publication 551 - Basis of Assets:

Vehicle Credits

Unless you elect not to claim the qualified vehicle credit, the alternative motor vehicle credit, or the qualified plug-in electric drive motor vehicle credit, you may have to reduce the basis of each qualified vehicle by certain amounts reported. For more information on available credits, see Form 8834, Qualified Electric Vehicle Credit; Form 8910, Alternative Motor Vehicle Credit; Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit; and the related instructions.



Accordingly, while there is no recapture of the credit itself, you will need to decrease the adjusted basis of the vehicle by the amount of the credit to calculate any applicable gain/loss resulting from the disposition.
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#3
CO CPA  
Posts:
729
Joined:
17-Oct-2018 10:46am
Location:
Colorado (CO)
AlexCPA wrote:Per 26 CFR § 1.30-1 - Definition of qualified electric vehicle and recapture of credit for qualified electric vehicle. (emphasis mine):

(2) Recapture event -

(i) In general. A recapture event occurs if, within 3 full years from the date a qualified electric vehicle is placed in service, the vehicle ceases to be a qualified electric vehicle. A vehicle ceases to be a qualified electric vehicle if -

(A) The vehicle is modified so that it is no longer primarily powered by electricity;

(B) The vehicle is used in a manner described in section 50(b); or

(C) The taxpayer receiving the credit under section 30 sells or disposes of the vehicle and knows or has reason to know that the vehicle will be used in a manner described in paragraph (b)(2)(i)(A) or (B) of this section.

(ii) Exception for disposition. Except as provided in paragraph (b)(2)(i)(C) of this section, a sale or other disposition (including a disposition by reason of an accident or other casualty) of a qualified electric vehicle is not a recapture event.


Per IRS Publication 551 - Basis of Assets:

Vehicle Credits

Unless you elect not to claim the qualified vehicle credit, the alternative motor vehicle credit, or the qualified plug-in electric drive motor vehicle credit, you may have to reduce the basis of each qualified vehicle by certain amounts reported. For more information on available credits, see Form 8834, Qualified Electric Vehicle Credit; Form 8910, Alternative Motor Vehicle Credit; Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit; and the related instructions.



Accordingly, while there is no recapture of the credit itself, you will need to decrease the adjusted basis of the vehicle by the amount of the credit to calculate any applicable gain/loss resulting from the disposition.


Thanks Alex. Uhhh, geez. Thank you very much for this information, super helpful.
 


Return to Taxation



Who is online

Users browsing this forum: Google [Bot], keninmichigan and 115 guests